Q4 20/21

May 14, 2021

Ladies and gentlemen, good day, and welcome to the Siplar Q4 FY 'twenty one Earnings Conference Call hosted by Kotak Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask Questions after the presentation concludes. I would now like to hand the conference over to Mr. Kumar Gora from Kotak Securities Limited. Thank you and over to you sir. Good evening, everyone. On behalf of Kotak, I thank the Sitla management team for giving us the opportunity to host their 4Q FY21 earnings call. From Cipla, we have with us Mr. Umang Gora, MD and Global CEO Mr. Kedar Upade, Global CFO and Mr. Naveen Bansal from the Investor Relations team. I'll now hand over the call to the management team for their opening remarks. Thank you, Gaurav. Good evening and a very warm welcome to the last quarter 4 and full year FY 2021 call. I'm Hamid from the Investor Relations team at Cipla. Let me draw your attention to the fact that on this call, our discussion will include certain forward looking statements, which are predictions, projections or other estimates about future events. These estimates reflect management's current expectations of the future performance of the company. Please note that these estimates involve several risks and uncertainties, including the impact of COVID-nineteen that could cause our results Actual results could differ materially from what is expressed or implied. Reply does not undertake any obligation to publicly update any forward looking statements whether as a result of new confirmations, future events or otherwise. With that, I would like to request Tidar to take over to you. Thank you, Navin. Good evening to all of you. I hope that all of you and your families have remained well. We appreciate you joining us today for our Q4 earnings call I hope you have received the investor presentation that we have posted on our website. Iblad continues to be at the forefront in the global fight against the pandemic. I would like to express my sincere gratitude to healthcare and other frontline workers, doctors, nurses, as well as our employees who have been working tirelessly to serve the patients across the country and grow. This is taking time for pharma industry with the strong support of the central and state governments have been working to ensure continuous supply of life saving medicines. While the uncertainties and challenges related to the pandemic are evolving, we stay committed to service demand across our markets, monitoring critical filing, Continued portfolio expansion along with the resilience in our manufacturing, supply chain and distribution. Our business and cost reevaluation initiatives, Supply consistency and rigor on the operational excellence have helped us drive the healthy performance for the quarter and the full year. Our profitability improvement journey has sustained across all the quarters during the year. And you may have noticed that in the quarter 4 also, it saw 2 40 basis points year on year expansion in the EBITDA margins. This is despite the fact that quarter 4 is a seasonally big quarter and COVID continues to decline sequentially for most part of the quarter. We have also moved our historical trend line of 16% to 9.19 percent of EBITDA to over 22% this year. And I believe this is Our free cash flow generation and operating efficiency helped us become an 8 cash company, And we improved our pre tax return on invested capital metric by over 7.50 basis points. We are noticing strong tailwind across our India portfolio, which is likely to play out in quarter 1 and onwards. This includes a surge in demand for COVID drugs, Including interest in the expected pickup in the antibody cocktail among others once we launch. We are also noticing strong demand It recorded year on year growth of 5%, driven by focused execution that I referred earlier. Full year revenue growth is 12%. For the quarter, our One India business, which includes prescription, credit, generic and consumer health portfolios, performed in line with our expectations. Our U. S. Generic The co foundation sales are at $138,000,000 Gross margin after material cost stood at about 60%. There is an approximate 200 basis point impact due to Charge on the metal costs that pertain to some of the inventories of product, which we built during the COVID period but Kotak liquidate. It also includes an overhead charge off and a one time shelf of adjustment for algeburol. Total expenses, which include employee costs and other expenses grew at INR1988 crores increased by 2% on a sequential basis. Employee cost for the quarter stood at INR815 crores and it declined by 4% over the sequential quarter. Other expenses, which include R and D, regulatory, quality, manufacturing and sales promotion are at INR 11.43 crores increased by 7% sequentially. Total R and D investment is about INR277 crores. As a percentage of revenues, the spends will moderate in line with the expected surge in revenue, but absolute trajectory of the spends and the filings, it remains intact Assets progressing in the trials and other portfolio development efforts continuing. Reported EBITDA was INR 7.96 crores to 17.3 percent of sales. Tax charge for the quarter is INR 128 crores and the ETR is lower at 24% also. The full year ETR was 27%. Profit after tax is at INR 4.13 crores or 9 percent of sales. As of 31st March 2021, Our long term debt stands at USD138 million towards the Invoigen acquisition, and South African rand R720 1,000,000 for operational requirements and metpro in South Africa. We also have working capital loans of dollars 49,000,000 and R75,000,000 which acts as natural hedges towards our distributors. Driven by relentless focus on the cash generation And return on costs recently during the quarter the year, we continue to be a net cash positive company as of March end. Outstanding derivatives at the date for this table as of March 21 are R129 1,000,000 and R634 million apart from additional loans in Australian dollar and global GDP. We have also raised a certain quarter of our Copak trade export revenues. And outstanding cash flow hedges as of 31st March are USD 252 1,000,000 and R754 1,000,000. To close, we saw strong execution across our key priorities in FY 'twenty one, and that included continued growth across our markets, Structural expansion in our EBITDA trajectory by over 3 50 basis points to over 22% and expansion in our pretaxes and on invested capital by more than 750 basis points. I would now like to request Sumant to present the business and operational performance. Thank you. Thank you, Kedar. Can you confirm, Kedar, if you can hear me well? Yes, Suraj. Sounds good. Okay, very good. Thank you. So firstly, I would like to wish all of you and your family to continue to stay safe and well. At Cipla, we continue to support the nations in its fight against the pandemic with our portfolio of COVID products. We salute the grit and Our topmost priority is in supporting the government's efforts on increasing availability of the COVID and other life saving products, to strategic inventory buildup and ensuring continuity of operations at our plant. We have enhanced safety protocols across our network to ensure safe operating environment for our colleagues, including a 20 fourseven ambulance, consultations and quarantine facilities. Our teams have been working relentlessly to ensure supply continuity with end of the year's monthly supply is now approaching almost 5 times What we have done during the previous week of the pandemic. We have also expanded our COVID portfolio with novel formulations in partnership with MST for Von Neufeldevif, Roche for the antibody cocktail and Eli Lilly for baricitinib. We are proud to bring these products to the country and are working on the logistics to ensure availability in the coming weeks months. With that, let me come to the strategic updates and the operational performance. I'm pleased to see the sustained expansion in our EBITDA margins through this year, including in quarter 4, now trending at over 22%, And I believe this strategy will improve and grow henceforth. In India, our One India strategy continues to see seamless execution with One India business growing 15% for the year and 4% for the quarter. This is, I think, the 7th or 8th time that we are beating market growth, 7th or 8th quarter we are beating market growth. The prescription business grew 14% for the full year. As per IQVIA March 2021, we continued to deliver market leading growth in our respiratory, where we grew 4% versus a market decline of 8 urology where we grew 7% versus a market of 4 Delma at 8% versus the market at 6%. Cipla consistently ranked number 2 with a market share of 8.1% in chronic therapies and grew by 12% versus market growth of 8% from March 21. We are observing a strong demand across the COVID profile, which will reflect in our Q1 numbers. We expect these products, which are used to supply which are used for the COVID to also see strong traction in the coming months. Apart from the COVID portfolio, we are also noticing strong volume trends across our acute and respiratory portfolio, including vivisimide. Our teams are working to ensure serviceability across these categories. Our Trade Genetics business continued to do well with a full year growth of 18%, adjusted for transfers to the consumer business. We've seen demand tailwinds emerging in this part of the business as well. Our consumer health business has now scaled up to over INR360 crores in revenue, Led by growth in the organic anchor brands as well as the continued traction in the transferred consumer brands. In line with the One India strategy, The Cladine brand was transferred to CHL from the Trade Genetics business during the quarter. This makes the total number of brands transferred in the last year to 3 and 6 till date. Our participation in the industry digital initiatives with the investment in ABCD Technologies and subsequently By ABCD and Farmer Act will also add to the digital channel transformation in India. In the U. S. Generics and young leadership The U. S. Generic co formulation sales for the quarter were US138 $1,000,000 and factors the one time shelf stock adjustment for albuterol and for Alutrool based on the competitor entry. Full year revenue stands at US5.51 Reflecting on FY 2021, I am pleased to see the unlocking of our SP portfolio with launch and ramp up of albutro, We should rank number 1 with a TRx market share of 87% of the Proventil market, 16.5% of the generic market and 13.2 Our focus continues on our complex launch engine along with Driving growth in the institutional channel. I'm pleased to report that for the full year, the overall profitability of the U. S. Generics business is very close to company level profitability. Our adware file is under active review with the FDA. We are working on responding to the queries and will continue to share updates. In line with the strategy for the U. S. Markets, the non respiratory fleet portfolio during the year also includes 2 5 partners peptide injectables, one of which is an NDA application. Turning to our South Africa and Global Access business, which includes South Africa, Sub Southern Africa and our Sigma Global Access. Our South African private business reported a strong 13% growth over last year for the quarter in local currency. We continue to maintain a 3rd position with an market share of 7% in the OTC segment as well as in the overall market as for IQVIA March 21. In Markets Southside South Africa, The sub Saharan business grew by 10% in dollar terms and the decline in the CGA business performance was in line with expectations of higher orders were serviced in the last quarter. In Emerging Markets, happy to see the business scaling up to US250 $1,000,000 growing almost 21% during this year and 4% for the quarter driven by healthy demand across all regions. During the quarter, we also expanded our partnership for 4 biosimilars in the strategic market of Australia across immunology, osteoporosis, oncology and ophthalmology. The European business grew 17% on a full year basis and 7% for the quarter, driven by strong in market performance in key VPNs and market share expansion in our flagship press release fee portfolio. Turning now to our outlook, we have established a new threshold for our operating We will continue to sustain this in the coming period. On the business side, you see commercial tailwinds across our business, which we believe are significantly higher than some of the risks in certain parts. We continue to stay energized with these opportunities and are working to ensure we'll be able to service patient demand across our markets. Our long term priorities remain intact, including leveraging the emerging opportunities across our markets and maintaining market leading growth in Branding and unbranded generic franchises of India, South Africa and also augmenting a consumer wellness franchise in both these markets. Wrapping up the COVID portfolio supply to increase availability and maximize patient reach, continued high vigilant cost and cash management amid the uncertain trajectory expanding lung leadership globally and by maximizing the value opportunity in the U. S. Complex generic space Focus on regulated clients across manufacturing locations and embracing best in class growing benchmark ESG practices, Accelerating our digital transformation to capitalize opportunities and growth opportunities across markets And also building a sustainable talent pipeline for the company's future plans over the next 3 to 5 years. I would like to thank you for your attention and will request the moderator to open the session for Q and A. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Tion Mukherjee from Nomura. Please go ahead. Yes. Hi. Good evening and compliments to team Cipla for efforts during the pandemic. Thank you very much for that. My first question is around the India business. Gerard, I mean if you can break it up please for FY 2021 Between the key COVID related products, how much they contributed, trade generics, the normal prescription business and the consumer business? That would be helpful. And the second question on India is, you mentioned about 5 times increase in Remdesivir supplies from last year peak, what's the outlook on supplies for Antibody cocktail and tocilizumab for this year and how does that compare to last year, please? Yes. Shayan, I'll take your first question with respect to the split. See, the total COVID medicine sales for the full year at a company level is around 4% or so. It's still less than 5% on a full year basis. In quarter 3, it's less than 3% also. So I think you should work with some of those numbers. The split of prescription, generics and CHL, we don't want to go into too much details, but Generic continues to be less than 20% of the overall One India revenues that We have declared the total INR7,700 crores and the credit generation is less than 20% of that. But it gets a little tricky because as you know, we have been we have launched an active program to transition consumer brands to the CSL business. So I think the best would be to look at the whole thing in totality going forward because the base would be different, Shai. So you can roughly work with those numbers. Overall, COVID medicines for the full year is between 4% to 5% at company level, split largely to India, but So I mean to EDAM and South Africa and other geographies as well. And the split of rate generates less than 20% of total volume. Okay. Yes. And on the supply of antibody cocktail and tocilizumab? Actually, the cocktail deal has been signed. As you know, we've announced it. We feel quite good about it. I think the reports are pretty strong. And it's a great weapon in the fight against COVID. All these details, Sayan would be more comfortable to announce So once the actual launch happens, the launch by the way is not far away from today. But I think with respect to capacity, number of orders, Pricing, all that will be comfortable to share once the launch happens. Okay. And my second question would be around the U. S. Market, you had ramped up albitrall. So how should we think about fiscal 2022 now, both with respect to albitrall and new launches, If you can provide some color or growth prospects for fiscal 2022, please. Okay, sure. Bhuvan, may I request you to take this question? Yes. So I think, Saion, where we are in terms of albuterol, we still see some expansion in the market Going forward, then I think we adjusted quarter 4 in response to a competitive entity competitive entity entry into that segment. I think in terms of launches, we have a reasonable launch here In this year, I think some of those will start coming out in starting with quarter 1. And I think the big year for launches obviously for us will be the next year. But we will have a reasonable year of launches in this year, which will allow us to sustain and grow the trajectory in the U. S. As well. We aren't providing sector guidance, Ryan. So there will be growth in the U. S. And there will be a reasonable number of launches. Okay. Thank you. And I'll join back quickly. Thank you. The next question is from the line of Prakash from Axi. Please go ahead. Yes. Thanks for the opportunity. A question on the gross margin. I missed your comments. You spoke about shelf stock That's my interpretation in Elbitral with the new player coming in. Was that correct listening or You want to repeat that if for the benefit of the outage? Yes, Prakash, there are 2, 3 reasons. And I mean, this keep happening based upon the Talking about inventory is, but some of the products that we have built during this period, which we could have liquidated And the charge off for inventory over it, that happens when the stock goes down. You would have noticed a significant drop in this quarter in the inventory holding, then That was with respect to the plant shutdown. So the overhead charge off, that's the one time thing which hit in this quarter. And there is a third shelf compensation spend for AlcoDrol as well. So all these three contributed, the total quantum is approx 200 basis points, Pratash. Okay. Yes, because YOY and both Q on Q you have improved on the U. S. With higher profitability business. So I would have assumed that The gross margin would have improved. Correct. So if you adjust, I think, this 2 or 3 reason, there is an improvement in the margins. And you mentioned the generic and one more generic entry in Elbitral. Is that correct? This is Sando, right? No, no. But that's just replacement from 1 distributor to other, right? Yes, that's the thing. That's the thing. So is it fair to understand that they have seen some correction in the market In terms of prices and hence you have to take the readjustment? Is that understood? Yes. That was expected. I mean, every single additional player, while the adjustment was not very disruptive, given the fact that we enjoy very high share within the provincial Market, the magnitude is not very high by the way. But after every player, I think minimal pricing adjustment is expected. Okay, perfect. And second one on your market share today and where we expect to reach by end of this year For your product? Yes. So within generic, the TRx share is about 16 point 5, if you take the total market, which is brand plus AG plus GA, it's about 13.2%. Within The generic product is obviously, as you know, we own the whole franchise, so that's about 87%. And I want to explain there is a headroom for us to grow on the shares during the next year. Okay, perfect. Great. Thank you and all of us. Thank you. The next question is from the line of Cynthia Balasubramaniam from Bernstein. Please go ahead. Thank you. My first question is on U. S. Specialty. So Avenue Therapeutics, We understand did not get an approval for IV tramadol before April 30. So if you can explain to us what does it mean? Is SIPL still likely to go ahead with the transaction? Will you be renegotiating? Any color on that would be helpful. So, Nitya, the approval is awaited. So I think the transaction, The obligation Cipla is still invested in Avenue and Cipla has an option to As an option to close the tramadol to close the transaction deal on tramadol up to a certain point in the future, which I believe is 6 months from now. And I think a lot of what happens will depend on the on what we hear from the FDA going forward. So I would think that the obligation for The close, we believe, has expired on 30th April. But I think the right to close still exists Until we kind of pause the time about 6 months or 7 months later until and obviously what is more dependent that depends more on what we hear from the SE. Do you have the option to renegotiate if the label changes are not as expected? No, I don't believe there is nothing in the agreement that allows either party to renegotiate. So I think as long as the agreement is not mandating any of Parties to renegotiate. I don't think there is a that there is an absolute necessity to renegotiate. Got it. My second question is on India sales and marketing spend. I think in one of the earlier calls, Kedar, you had mentioned that you would be expecting INR 400 to INR 500 crores savings and you can update us on which of that what part of it you potentially see being Into FY 2022 as well. If you can throw some color on has they normalized already? Is Q4 a normal quarter in terms of your spend? And what do you how do you see that kicking off in FY 'twenty two. Yes. This is an evolving matter for us. So for FY 'twenty one, I think we exceeded what we thought The saving target we could have, we believe our operating plan. And we are pretty energized. I mean, We also said it in the last call that we are pretty energized and excited with respect to the levers that we have been able to unleash during this period through multiple ways. 1 is obviously virtual mode of engaging with channel partners, customers and health care practitioners secondly, In production of digital ways to run our own business. And thirdly, are we looking at what is actually discretionary business and what discretionary spend And what is the cost of doing business? So I think our discovery of how efficient our model can be for our domestic business has unleashed a lot of potential. Our attempt is to preserve it in the next year. And the expectation is not at all to plow back all the costs that we saved in fiscal 2021. And that's the comment that I made that vis a vis our historical trajectory of EBITDA, it was 16% to 19% or so. We have been able to Go to 22%, beyond 22% actually, 22.5% or something. And the idea is to detail that to keep it sustained. And the structural levers have been unlocked. And a last part of this improvement, especially on the cost side And Sales and Distribution side has got to do with the India business, the way it works and engages. Can I assume Q4 was a fairly normal quarter for you in terms of what you would have normally spent on the ground with doctor sales, marketing, etcetera? Yes, I mean, to a great extent, but as you know, the I mean, the team starts getting ready in the quarter 4 to deliver on quarter 1 to some extent. And while that's true, the activity is lower as well. So I think more or less, I think you could model that way. But obviously, the sales base of next year is higher. So the investment and the activities which are required Will be different as well. So I will just caveat your statement with respect to this change in the same space. Understood. If I might just squeeze in one more on Advair. Umman, you had mentioned that you're working on a query. Any visibility off, can you tell us a bit more about Have they asked you to generate additional data? Is this a major CRM, minor CRM? What could be the revenue cycle? Just to give us a bit more sense of when we might to see this product in the market. Yes. I don't think we have to generate any further pharmacodynamic clinical data. I think clinical data is from what we've submitted doesn't have too many questions. And generate data, the FDA always ask for additional information, but for us it is all information related to the non clinical portion of the product. So we are in the process of replying and I think we should be replying shortly to it. And then that would start their inspection review of the product as well. So this is usually a 6 to 8 month review time frame once you have submitted your response? Well, I would hope so. But I think on this product, Nithya, we had already said that from the time we filed, which was May of the year, the 4th this, we said that the earliest that we can expect anything is going to be a period over 2 years, Right. So I think from the time we file, I don't think you could make the calculation that 2, 2.5 year period is Pretty normal for a product like this. Thank you so much. Thanks, Aman. Thanks, Ketan. Thank you. Thank you. The next question is from the line of Neeraj Ketan from BT Capital. Please go ahead. Yes. For the quarter, year on year growth has been 4% for India. Can you tell us the ex COVID growth for the year for the quarter? See, there are a lot of moving parts, Ketan. I explained to you the contribution of COVID business on a full year basis. You should model based on that. But all the I mean, the businesses continue to be strong, And you would have seen the market data for April as well. So I think you should model based on what we just said. Okay. Yes. Thank you. Thank you. The next question is from the line of Surya Pasha Mr. Sune Fatima, your line is unmuted. Please go ahead with your question. As there is no response from the current participant, we take the next question from the line of Neha Manpuria from JPMorgan. Please go ahead. Yes. Thank you for taking my questions. Just to know some clarification on the EBITDA margin trajectory that you talked about. Well, several times you said that the margins would improve from the 22%. You've also mentioned that the efforts would be to Ehab, this morning. Given that the India cost will normalize to some extent next year, What are the additional drivers for the margin versus FY 2021 level? Yes. So Neha, I think, if you I I mean, whatever investment you have to make for the India market, I think Am I audible? Yes, Kailash. Okay. No, so Nemat, to answer your question, the investments for India business, This will be highly productive. So we are not worried about that. Even if there is an escalation which happens, as I said, we will I'll link it to the activity, and we'll link it to the sales base of fiscal 'twenty two. So any incremental Marginal plowback is that we have to do from the savings that we did in fiscal 2021. We are not worried about that. But I think that there were levers available. And pricing is 1, mix is another. And the portfolio, the launch momentum is first. So I think between these See, across businesses, I think we have a plan there, which suggests that the sustainable trajectory of the EBITDA is the range in which we are reporting now. Okay. So just to understand what you're trying to say is that while it might fluctuate, This is the 22% whatever percent is the range you would like to be stable in the medium term. That's true. That's true. Okay. And on the gross margin, historically, it will be 63% to 35% total gross margin number. Even if I were to adjust the 200 basis points, we are in that Lower end of the number. To get to the high does it need a lot of the U. S. Launches to come through and therefore it's more FY 2020, FY 2024? Is that a quick look at gross margin? I guess so. And another reason is a large part of our trade generics business, To some extent, our prescription business, I think the items are bought out. So the loan licensing operation we have, the The TP operations that we have is where we buy the product. So I think I certainly have any gross margin in what we should track. But if it's time to be more representative, You have the businesses which we don't have organic support of the material, but we buy from outside because the material costs subsumes overheads of our vendors. So I think EBITDA is little more representative. So I think mix of a particular quarter and typically quarter 4, Neha, you have seen the trend over the years. That's why what's your change in the expanding gross margin rate some due to some extent. It's more a mix issue in a particular quarter rather than Any weakness, I would say. Okay. Understood. Thank you. Thank you. The next question is from the line of Nimesh Mehta from Research Delta Advisors. Please go ahead. Yes. Thanks for the opportunity. First, I can For some clarification regarding the shelf stock adjustment that you have taken on Albitol, I mean, are these lost sales or you think you'll be able to recover it? No, I think the sales of investment is typically given the niche when you match the price. Let's say after every entry of Harishu player, there is a Price adjustment that happens when you match. And for the quantities which are being held by the customer, you offer this discount. It's all very material by the way. If you normalize for this, I think we are in line with the sequential revenues for the U. S. Airx business. But this This is a regular happening within the U. S. And its market, Naresh. Correct. No, but you mentioned that there has been a 200 basis point impact. I guess that could be on margin, which is why it becomes a little more. No, I think 200 basis point impact on the margin is primarily because of certain inventory write offs And the overhead charge off that I referred to, this is the shelf stock adjustment is not a major reason. And as I said, I think there's a headroom from The market is stand alone. I think for Alburra, there's a strong headroom that we have in fiscal 2020. Okay. Other question is regarding again the U. S. And its pipeline. A couple of products that we see are important for supply and that can be launched. If you can give some color, 1 is lanthanum carbonate and second is the paclitaxel protein bomb. So I think we don't offer product specific, but One of these is probably slated for launch in the next few months And the other one will probably launch sometime in the later half of next year. Throughout the next year. Okay. And both of them are important opportunities, right? I mean is that a fair understanding, right? Yes. I mean, these launches, if you're asking me whether these could be meaningful launches, I think one is obviously bigger, much Okay. Thank you. Thank you. The next question is from the line of Saurabh Buttarak from IFL Hello? Mr. Saurabhutra from IFL, you may please go ahead. As there's no response from the current participant, we take the next question from the line of Sameer Balsiwala from Morgan Stanley. Please go ahead. Thank you very much and good evening everyone. Omar, you mentioned that fiscal 2023 For U. S, it will be a big year for new launches. Can you expand on that? Sameer, yes, I think we have got I think between We are hoping that between Adware, between a product which is settled, between a Product that the earlier person on the call asked for, I think we have quite a few And possibly a test guide. I think we have quite a few products that are lined up for FY23 for launch in the U. S, which are I would say meaningfully, Dave. Now obviously, they depend. They are complex in nature and they depend on the timeline. But I think this will be we see FY 2020 as a very significant year for the U. S. Generic business. Thanks for this, Uman. Other than these three, is there something else on your mind? Hi, Dennis. Yes, there are a few others as well in FY23. Okay, great. And secondly, it's on peptide products. I probably missed your comment. Did you say that you're partnered for 5 products and the presentation said of which you have filed for 2 including 1 NDA. Is that correct? Yes. A lot of the peptides we are doing, we have partner Because it's a fairly complicated API side, as well as most of these have issues with devices and things like that. So we are partners. And of that, I think we filed too and this filing list will increase as we go forward. Okay. And what do you think would be the approval cycle here? I mean, is it like 3 years plus going forward? Well, some have IT, some. So obviously, we'll have to follow that. But generally for those which IT is not there, I would expect, I mean, the same 24 months will be a reasonable expectation. Okay, great. And one more, if I can. On EBITDA margin, I'm a little confused Because I think in Q1, Q2, Q3, I think all the 3 quarters you were doing more like 23%, 24%. I know 22% looks good on a full year, but in Q4, certainly it's come down to 17%. And Kedar, I think you explained for 200 basis points. What about the rest? And why such a sharp dip? And how should we think about it going forward? Yes. Sameer, I think in quarter 4, historically, the trend is that we have sequentially typically go down from quarter 2 and quarter 3. Because typically, quarter 2 and 3 are Recipe is for us in India and sort of that changes in quarter 4. It is basically the mix of domestic in the overall company, which is the probably the only reason which causes this change. So this fundamentally and structurally, Business by business, nothing changes. It's more the mix at the company level rather than anything else. Okay. And, Umang, just your thoughts on vaccines. I know you're doing so much On the COVID on the therapeutic side and thanks for that. It's a wonderful job. But on vaccine side, it has not done much. Are there any big entry barriers to this business in terms of manufacturing, etcetera? How are you thinking about So I think there are let me put it this way. I think people have made a business out of Axi And some of those companies are as big as Cipla and they have large manufacturing footprint like Cipla. Right. So it's been very good in the and so I think that somebody like us to overnight compete with any of them It's very difficult. I don't think we would and it's probably not prudent for us to do that. Having said that, I think What is the easier part of vaccine is more the fill finish. Drug substance part of it is scientifically different than what we know. So I don't think we have any immediate plans of developing our own vaccine. I don't think we're going to do that. But as I mentioned earlier, we are always open to partnerships that we can have Thank you. The next question is from the line of Charulita Gaidiani from I have two questions. 1 pertains to the increasing cost Some raw materials that have been in the news for quite some time. Do you expect I mean, how well is Cipla protected Against this? And do you see increase in realizations happening Related to Kotak products? So, Charunatha, we have been vexed with this Procurement escalation, procurement cost escalation, in fact, throughout the last year. But fortunately, it is happening in select products. It's not that the whole portfolio is going up and getting escalated in terms of costs. I think selected products where Either there is an issue with respect to closure of a particular client or something else happening in China. That's what we have experienced. And On the whole, while we have seen an escalation, we will be able to handle it well from an EBITDA standpoint. So that's our big The priority actually is to secure the quantity of materials that we need. And We have been able to manage both the quantity and the cost of procurement. Without your second question, actually, the COVID products Cannot have a price increase. I mean, as you know, all of us, all the We took a price decrease in line with the affordability and access goals in India. So that's the reality, and we are happy to work with the Indian government on those angles. Okay. And another question relating to South Africa. This quarter, we had seen a slightly lower growth in South Africa compared to The other quarter. So do we think that there's a new base? No, it's not a new base. I think we grew by 10% in RANs in this quarter, which is significant. I think our outperformance in South Africa across each quarter for the full year For the last more than 3 to 4 years, it's phenomenal. And within that, you can see from our Presentation, the private market actually has grown in 13%. So I think, well, generally, the South African overall pharma market is Either declining or growing in low single digits, I think this performance is incredible, and that goes to our leadership on the ground there. So I wouldn't say that quarter full growth is muted or anything like that. I think the outperformance we know with the overall market continues. Yes. Okay. All the best. Thank you. The next question is from the line of Krishnayendushar from Quantum Mutual Fund. Please go ahead. Yes. Thanks for the question. Most of them have been answered. But just on the 2, which Poonong alluded Sorry, can I ask your question on the peptide product or Okay? And just on the margin side, so this quarter we are having Right. Percentage increase, I think, so we are going to ramp up the R and D expenditure going ahead because we have a couple of filings to be done with partners. So how do we see do we still maintain that EBITDA margin of 22% in spite of that going up to 6%, 7%? Yes. We would do that, Prischendu, because I think At the increasing revenue scale anywhere 6% to 7%, I think is enough considering the pipeline that we have and the programs that we are running. I think that should prevent us from growing our EBITDA. I think there is Good headroom to improve EBITDA percentage and we are committed to that. Okay. But the full year is coming around roughly 2.8% for the full year for this year. So next year, we'll probably end up on that. Anyway, thanks a lot. Yes. Thanks. Thank you. The next question is from the line of Surya Pazda from Philip Capital. Please go ahead. Yes, thanks for the opportunity. Keita, just one more thing. If you can tell what is the kind of digital initiatives that we have taken that is known. So what is the kind of saving that one can anticipate on the cost front? Let's say, If we consider FY 2020 as a kind of a base year, from that to FY 2022, what is the kind of sustainable saving that one can Anticipate on this front because of the digital growth initiatives. Yes. So, Suriya, I think this initiative span over each area of operation throughout the company. So I think starting from sales and distribution and commercial within India and across the globe, Then going to manufacturing and quality, then supply chain and all the other corporate functions as well. I think each function and business unit, We have been able to identify a very specific set of levers, Surya, which means that I think we Digitize our operations, we convert the activity to a virtual mode, and we identify efficiency to unlock the time and the cost So you don't eliminate the activity if it is not value adding or you digitize or make it virtual. And I think we are encouraged with this work that we have been doing throughout the company. I won't be able to tell you the The content will get subjective at times, because sometimes you eliminate non valuing activities, sometimes you Stop discretionary activities and sometimes you run the activities but in a different mode. But all throughout, I think, we are energized, that much I can tell you. And We don't want to have them as a flash in the pan for fiscal 2021. As I said, our I can tell you it's one of the most active workspaces in the company. Okay. So anyway, you have not quantified, but that's fine. So now the second question is on the Kind of a COVID portfolio and it's a kind of a contribution, profitable contribution Good morning, Ed. See, how sustainable is the opportunity it looks like, although there are talks and things are moving every day, It's not very clear about many aspects about COVID, but how sustainable the opportunity could be On the so far as contribution from this portfolio is considered. And is it Relatively more better profitable segment compared to the current blended margin of the company. See, I just said that the total COVID sales in fiscal 2021 are around 4% or so at a company level, Primarily into India, but into other geographies as well. And that We I mean, from our vantage point, the way we are looking at the second wave, how lockdowns are evolving in each state, Tough to say how much contribution we'll sustain, but we see this a longer term business. And as a responsible pharmaceutical company, we are deeply committed to it. And the reason we are doing these deals with Roche On the COVID antibody cocktail and the baricitinib and products like that, I think it comes from this region about caring for life. So it's not going to go away in months or so, if that was your question, but it will be tough for us to tell you precisely. But as I said, at a company level in revenues and profits, short track, this is a huge contributor. But whatever it means, it will sustain To a great extent. In the near term and over time, obviously, it will taper down as the cases go down. And all of us want that to happen. Okay. Just last one small question. Umutar, if you can just share your thoughts on the Cipla Biotech What you have created for U. S. What is your thought process around that? So I can take that, Surya, this is Keshav. We announced in the last quarter, this is a scheme of demerger, which The intention of that is to have a sharper allocation of assets. So I think all the assets in India, which service the U. S. Business, We'll get housed in this subsidiary. It is not yet fully done because it needs to pass through several regulatory approval. So I think it's been taken with all the regulators. And whenever it gets completed, we will speak to you. But as you would recollect last time we had spoken, there are 2 What's 2 streams to this demerger? 1 is the U. S. Business and secondly, the consumer brands. So I think both these are being taken through various regulators for their approval. And as of now, there is no specific corporate actions subsequent to that, Which we have on the table, but this is just appropriate reorganization of the assets and the bulk of it. Okay. Yes, sure. Thank you. Thank you. The next question is from the line of Nitya Balasubramaniam from Bernstein. Please go ahead. A quick one on if you can throw a bit more visibility into the respiratory genetic pipeline, the 1 Fastned asset The 2 you mentioned are in clinical charge switch. The partnered asset, Nithya, I think that The partner is now in the process where it's, as we mentioned last time, where they are in dialogue with DIA3 And submitting the data that's required. So that's on the partner's respiratory asset. On the rest of the pipeline, we are likely to be in clinical input products in this year. So I think beyond that, I mean, the rest of the work for India, emerging markets and Europe continues. So a quick follow-up. So the partner, I said, do you have visibility on when you might be able to launch The product and the clinical trial is already underway and when do you expect to complete those in subjects, Ananda? I think the clinical trials are done And I think the partner is probably in the process if it is not only responding With their file to the FDA. And clinical timeline, I guess, is from here It might take another maybe another 12 to 18 months for the partner, If the product is approved. I'm sorry, Uman, it's a little confusing. So the partner product is The partner is conducting clinical trials on the partnered product, and it's going to be another 12 to 18 months before they wrap it up, right? No, no, no. The partner has completed the and the partner is now in the process of Filing this with the FDA and post filing will be there, it will probably take at least 12 to 18 months For the revenue cycle. Understood. And on the two products, which is Cipla's own, where you run a clinical trial, What is your best visibility on when you're likely to file? So, Nithya, we won't share that detail, But you could expect filings next year towards mid of next year is my guess, Thank you, sir. Thank you so much. Thank you. The next question is from the line of Arpit Kapoor from IDFC Mutual Fund. Please go ahead. Yes, thanks for taking my question. This is regarding the U. S. Business. So if I look at the numbers, we did Close to $135,000,000 in Q1 and we are exiting the financial year this quarter at 138. And we saw gradual ramp up of albuterol in all the 4 quarters. And the numbers for the second and the third quarter were also in the range of $140,000,000 So has the base business eroded so much that we don't see any delta of albatross sales in the overall U. S. Sales number? Paul, am I missing anything else? No, I don't think there is erosion in the base business more than What we signaled, the U. S. Business responds to launches. The price erosion is there as a regular feature in the U. S. Business. As your launch trajectory starts to increase, Your launches offset a significant portion of tricerodin and allow you to grow. In our case, I think as the launches start We will see the traction in the U. S. Business. We were at about 115 to 120 strategy before we launched albucrol. We are now at our current trajectory post as we call. So I think it's that's how it is in the U. S. So we will see trajectory Ramping up as our launch is coming. Yes, I understand. But I guess even albatross market shares have ramped up over the last 4 quarters, Yet our U. S. Sales have been pretty sticky around $140 or $1,000,000 mark. So and we would have had couple of other launches as well. So has the base erosion been has the base business eroded So much that we don't see any impact of significant not by a significant amount, which is nothing more than what we Look at it as a normal erosion, is that your question? So, no. So, in the quarter where we may have not had any loss, any significant launch, We have seen a $23,000,000 impact on overall numbers and that so that doesn't mean that there is erosion. It just means that launches are not coming to supplement the business. I don't think we are just seeing any major erosion in the Okay. Because probably I'm still not able to understand why At least on a sequential basis, our business every quarter should have improved, whereas we have just remained flat for almost all the 4 quarters. Okay. And so the current base of 138 should be the base that we should take and most of the pricing adjustment that albuterol, at least for the new generic, We have taken it and that should be the way going forward for the next year. Correct. Okay. Sure. Thanks. I'll sit back. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing comments. Over to you. Thank you, everyone, for joining us on the call today. In case you Thank you. On behalf of Kotak Securities Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.